Exxon stock price plunges despite earnings beat

Shares of Exxon Mobil (NYSE:XOM) plunged more than 4% on Friday after the oil giant posted a first quarterly loss in years amid the collapse in oil prices. 

Fundamental analysis: Significant impact on near-term demand

Excluding a $2.9 billion charge, Exxon reported a non-GAAP earnings of $0.53 cents per share compared to the FactSet consensus of $0.01 cents per share. A net loss of $610 million was reported compared to a $2.35 billion profit in the same period a year ago. 

“COVID-19 has significantly impacted near-term demand, resulting in oversupplied markets and unprecedented pressure on commodity prices and margins,” CEO Darren Woods said in a press release.

Revenue dropped to $56.16 billion from $63.63 billion a year ago, but again higher than market expectations of $53.5 billion. The oil giant reported a cash flow of $6.3 billion. 

“Our company remains strong and we will manage through the current market downturn as we have for decades. Today’s circumstances are certainly unique, but our people have the experience, our business has the scale, and we have the financial strength to see us through and emerge stronger than ever,” Woods said on Friday.

Exxon said that it was producing 4 million barrels per day of oil, an increase of 2% compared to a year ago. Exxon still plans to pay its shareholders a $0.87 per share in a dividend. 

Despite the significant plunge in oil demand, Woods is confident that things will change soon.

“Economic activity will return, and populations and standards of living will increase, which will in turn drive demand for our products and a recovery of the industry”.

As reported by Invezz earlier, the oil giant will cut its capital expenditure budget by 30% – from $33 billion to $23 billion – and cash operating expenses by 15%.

Technical analysis: Bulls holding support

Shares of Exxon are trading around 4% lower after the company reported $610 million loss for the first quarter. A record level of supply was registered in March and April, which is likely to continue weighing on the global oil prices. 

As seen in the chart, Exxon stock price is now testing the support of the ascending wedge, which is considered a bearish continuation pattern. A break of this trend line is likely to trigger another selloff in Exxon stock price, with a potential pullback to $38 support possible. 

On the upside, the buyers will try to force a push higher that will take the price action to a next resistance zone around the $55 mark. 

Summary

Shares of Exxon dipped around 4% on Friday after the company reported a first quarterly loss in years. The sellers pushed the price action lower despite earnings and revenue coming in higher than market expectations.